Template-type: ReDif-Paper 1.0
Author-Name: Erdem O. 
Author-Name: Can B. 
Author-workplace-name: GSBE
Title: Present-bias in different income groups
Abstract: The excessive use of credit cards and increasing consumer borrowing has been a major problem.
Laibson (1997) suggests the present-bias problem as one of the driving forces of excessive borrowing. Shefrin and Thaler (1988) suggest that self-control underlies national borrowing/savings
rate. We conduct a survey to check for present-bias as well as self-control problems among individuals in Turkey. Our findings show that different income groups have similar discount factors,
i.e., impatience levels, but very different degrees of dynamic inconsistencies, i.e. present-bias
levels. In particular, 29.4% of low-income individuals exhibit present-bias whereas this is down
to 6.4% for high-income individuals. Using the parameters we achieve through the surveys,
policymakers can design appropriate commitment devices for time-inconsistent individuals to
ensure a sustainable level of aggregate saving and financial investment.
Keywords: Field Experiments; Personal Finance; Intertemporal Consumer Choice; Life Cycle Models and Saving; 
Classification-JEL: C93; D14; D91.
Series:  Research Memorandum
Creation-Date: 2013
Number: 008
File-URL: http://pub.maastrichtuniversity.nl/81733505-3f13-46f8-9228-3eb7b6dbc13d
File-Format: application/pdf
File-Size: 360222
Handle: RePEc:unm:umagsb:2013008